Why IMG Is Letting Tiger Walk

There's been some peculiar Tiger Woods news lately. The 42 he shot for nine holes at the Players last month. (You can shoot 42, right?) His withdrawal from this week's U.S. Open due to injury. (He won the 2008 U.S. Open basically on one leg.) But the weirdest news came last week: IMG let Tiger Woods walk out the door. The man has slowed down, but he still prints money. So why would the sports marketing behemoth let him go?

When Mark McCormack founded IMG in 1960, his goal was to make golfers rich. For years his star client, Arnold Palmer of Latrobe, Pa., made as much as Wall Street titans. Decades after winning his last green coat at the Masters, the King was moving product—whether it was Rolex watches or cans of Pennzoil—like nobody's business. McCormack, who died in 2003, began pitching IMG to Earl Woods in the late '80s, when Tiger was still in middle school, and Tiger, like Palmer before him, became the earnings king. Have you played Augusta National yet (on your Xbox 360) courtesy of Tiger Woods PGA Tour 12: The Masters? It'll cost you 60 bucks. The EA Sports game debuted in March and set a franchise record for first-week sales of 225,000 units.

On last year's Fortunate 50, an SI.com listing of top U.S. athletic earners, Tiger's 2009 take was estimated to be $90.5 million. Nobody made more. The eighth-annual list was posted this week, and for the eighth year Woods is No. 1. Injuries and lousy putting have stifled his on-course earnings, and as a pitchman he's still paying for his serial dating. Still: $62.3 million for 2010. If you ran a sports marketing company, you'd be happy to get the crumbs from that cake, right?

Well, Ted Forstmann, the legendary businessman who bought IMG from the McCormack family in 2004, 71 years old and diagnosed last month with brain cancer, let Woods go. Actually, he let Woods's longtime IMG agent, Mark Steinberg, who ran IMG's golf division, go first. Steinberg's contract was up for renegotiation, and he wanted more than Forstmann was willing to pay. On May 24, Steinberg announced he was leaving IMG after nearly 20 years at the Cleveland-based company. IMG knew then that Woods was likely to follow, and he did. On June 6, Woods posted these 140 characters on Twitter: "Staying with Mark Steinberg. Total confidence in him. Excited about the next stage in my professional life. Fond memories of Mark McCormack." It was a nice try by Woods, an attempt to make the biggest sports business news all year seem casual. It was anything but. Woods doesn't do casual. Note the final two words of his tweet. Note the absence of any reference to Forstmann or anybody else at IMG.

Alastair Johnston, the vice chairman of IMG, Woods's former neighbor in the Isleworth development in Orlando and the man who presided over the Woods-Steinberg marriage, said last week, "Mark has an aggressive sense of his own worth." Johnston, an IMG lifer, predicts that as Steinberg decides what to do next—join an existing agency, recruit other agents and start a new one, fly solo—he will want to maintain a relationship with IMG's entrenched global network of golf agents to handle Woods's European and Asian contracts. He believes Europeans and Asians are more forgiving about the revelations in Woods's private life and that Europe, and Asia especially, will have far more golf growth than the United States.

Steinberg wasn't sounding so harmonious. He said last week, "I worked my ass off for 19½ years, and it's time for me to do what I want to do." Asked if he planned to continue to work with IMG, Steinberg said, "Let me put it this way. I am moving on to the next phase of my business life. I'm looking forward 100 percent. I'm looking backward zero percent." He made regular references to his "client," singular. Jerry Maguire lives.

Mark McCormack would barely recognize Ted Forstmann's IMG. McCormack built the company on the unique personalities and golfing skills of three men, Palmer, Jack Nicklaus and Gary Player. IMG still represents the 81-year-old Palmer, who, with Johnston, attended a U.S. Open Rolex dinner on Monday night. But IMG no longer represents Ernie Els or Vijay Singh—or Tiger Woods. It doesn't have Lee Westwood or Rory McIlroy. Forstmann is emphasizing U.S. collegiate licensing, European soccer, global TV rights, event management. "Our representation of the R&A and British Open is far more valuable to us than our representation of Tiger," Johnston said. "Exponentially so."

Forstmann pays his top executives more with equity than with salary, the opposite of McCormack's model. He wants to build up the value of the company as quickly as possible with the idea of selling it, the sooner the better, and Steinberg's pay demands weren't going to help IMG become more attractive to a buyer. Forstmann, a golf nut himself, didn't want IMG to lose Tiger Woods as a client. He wasn't making any grand moral statement about how Woods led his private life. As Michael Corleone says to his brother in The Godfather, "It's not personal, Sonny. It's strictly business."

Sixty-two million is a lot of money, but Tiger's trending down and cricket in India is on the uptick.

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On SI.com's 2011 Fortunate 50 list Woods's earnings still top all U.S. sports figures'.